Officials from the European Commission have demanded that Luxembourg hand over documents relating to book retailer Amazon’s tax affairs. The crackdown by the EU has already affected Apple, Starbucks and carmaker Fiat’s financial arm.

The European Commission is investigating Amazon to see if its
Luxembourg tax base complies with EU state aid rules and to see
what kind of relationship exists between the tiny EU country and
the bookseller, the Financial Times reports.

The Brussels-based Commission is carrying out fact-finding
missions in various EU countries as part of its campaign to clamp
down on so-called “sweetheart” tax deals with large
companies.

There has already been significant criticism across Europe at
Amazon’s tax structure. Evidence has come to light that some
multinationals are paying virtually no tax at a time when EU
governments have been forced to bring in tough austerity measures
to cut state budget deficits.

Amazon is already under the spotlight about questions on its
business practices, including harsh working conditions in its
warehouses, squeezing suppliers and its role in pushing small
high street book retailers into liquidation.

The investigation into Amazon comes after similar probes into
Apple, Starbucks and Fiat Finance and Trade, which are also based
in Luxembourg.

The investigations scrutinized the companies’ “transfer
pricing” arrangements, which determine how taxable profits
are allocated between countries – allowing them to pay
significantly less tax.Luxembourg, according to the European
Commission, has failed to fully cooperate with their
investigation.

EU competition commission Joaquin Almunia is believed to want the
investigation to be well under way by the time he leaves office
later this year. He also hinted when the probe into the three
multinationals began in June that the net could be cast more
widely to catch companies pursuing “aggressive” tax
avoidance.

“In the current context of tight public budgets, it is
particularly important that large multinationals pay their fair
share of taxes,” he said.

Apple’s tax affairs stirred disquiet last year after a US Senate
committee claimed that by keeping its tax base in Ireland, it
allowed the company to apply a corporate tax rate of just 2
percent.

Separately, the Paris based Organization for Economic Cooperation
and Development (OECD) is planning to overhaul international tax
rules for digital companies.